Sugar companies in Vietnam have improved their business operations and boosted their earnings in 2023, thanks to the increased demand and prices of sugar, as well as the effective control of smuggled sugar products.
According to the financial reports of some major sugar companies in Vietnam, their sales and profits in 2023 have increased significantly compared to 2022. For example, Quang Ngai Sugar Company announced that its sales increased by 73% in 2023, with revenues exceeding 4.04 trillion VND, more than doubling the company’s 2022 figures. Its gross profits were 3.22 times higher in 2023 than the previous year, reaching nearly 1.21 trillion VND.
Another leading sugar company, Thanh Thanh Cong-Bien Hoa, also reported increased revenue and market share in 2023. In Q4 2023, the company’s revenue reached 7.02 trillion VND, while its profit margin soared from 7.6% to 10.6%, resulting in a 40% increase in gross profit. The company’s net profit in Q4 2023 reached 142 billion VND, 50% higher compared to the same period in 2022.
The sugar companies attributed their improved business performance to the higher demand and prices of sugar in the domestic and international markets, as well as the trade defence measures and effective control of smuggled sugar products by the authorities.
Higher demand and prices of sugar in the market
The demand and prices of sugar in the market have increased in 2023, due to various factors, such as the recovery of the economy and consumption after the Covid-19 pandemic, the adverse weather conditions affecting the sugar production in some countries, and the increased use of sugar for biofuel production.
According to the Food and Agriculture Organization, the global sugar consumption in 2023 was estimated at 185.9 million tonnes, an increase of 3.3% compared to 2022. The global sugar production in 2023 was estimated at 182.7 million tonnes, a decrease of 1.8% compared to 2022, mainly due to the droughts in Brazil and Thailand, the two largest sugar exporters in the world.
As a result, the global sugar prices have been on an upward trend since November 2022. They reached 25.5 US cents per pound at the end of December 2023, an increase of 24.6% compared to the beginning of the quarter. According to Vietcombank Securities Company, the sugar prices in Vietnam increased to 23,500 VND per kilogramme by the end of Q4 2023, an increase of 11.3% compared to the beginning of the year.
Trade defence measures and effective control of smuggled sugar products
The sugar companies also benefited from the trade defence measures and effective control of smuggled sugar products by the authorities, which helped protect the domestic sugar industry and ensure fair competition. In 2022, the Ministry of Industry and Trade imposed anti-dumping and countervailing duties on sugar imported from Thailand, ranging from 33.88% to 48.88%, after an investigation found that the Thai sugar exporters had dumped and subsidized their sugar products in the Vietnamese market, causing significant damage to the domestic sugar industry.
In 2023, the Ministry of Finance and the General Department of Customs also intensified their efforts to prevent and combat the smuggling and trade fraud of sugar products, especially from Cambodia and Laos, which have preferential tariffs under the ASEAN Trade in Goods Agreement. The authorities seized and destroyed thousands of tonnes of smuggled sugar products, and imposed fines and penalties on the violators.
Positive outlook for the sugar industry in 2024
The outlook for the sugar industry in 2024 is positive, as the demand and prices of sugar are expected to remain high, and the domestic sugar production is expected to increase, thanks to the favorable weather conditions and the investment in improving the sugarcane quality and productivity. The sugar companies are also planning to expand their business activities and diversify their products and services, such as producing organic sugar, developing biofuel projects, and providing financial and technical support to the sugarcane farmers.
